Tuesday, June 18, 2024
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Shipping lines up in arms over the rule of dollar payments only

Shipping lines are up in arms over the sudden decision by the Government requiring settle payments to the Sri Lanka Ports Authority (SLPA) only in dollars with effect from 1 June.

The move was announced last week by new Ports and Shipping Minister Premitha Bandara Tennakoon, following discussions with stakeholders to boost dollar liquidity in the country. 

However this decision has been taken arbitrarily by the new Minister without the Central Bank’s consent and monetary  authority is not in favour of such demands. 

 The central bank was also planning to relax a rule that required tourists to pay hotels in dollars only, CB Governor Dr. Nandalal Weerasinghe said.

Shipping industry sources said “We don’t know how much research has been done  prior to taking this decision. However, the shipping principals are now up in arms with this decision,”.

They said traditionally shippers had the opportunity to settle their freight to  the shipping lines in Sri Lanka through their local agents in Sri Lanka Rupees at the exchange rates prevalent. These funds were in turn repatriated to their principals.

“However, over the last year the banks were unable to support the repatriation of funds to their principals which resulted in most of the shipping principals insisting upon freight settlement only by way of dollars in Sri Lanka which is the current norm,” they said.

It was pointed out that shipping lines are saddled with rupees collected prior to their change of stand which they were using to settle their local disbursements including Port related charges.

With this recent decision the shipping principals are now faced with a new problem.

Shipping agents and their principals said the arbitrary policy decisions would only drive away the existing lines calling Colombo.

They said one hand the freight which was collected in Sri Lanka has suddenly reduced significantly with the devaluation which is a huge burden to them and over that we are stuck with these funds in Sri Lanka.

“The shipping business  has been built over the years and  today is one of the buoyant industries in the country bringing in much revenue into the country which we badly need furthermore supporting the export industry, hence it is not ideal timing to erode this industry especially at a time like this,” sources warned. 

Number of ships calling Colombo port in the first two months of the year has reduced by 7% in comparison to a year ago. However total container handling has risen by 8% to 1.2 million TEUs. Transhipment volume grew by 8% to 0.96 million TEUs and domestic boxes by 9% to 0.21 million TEUs.

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